Monday, April 30, 2018

Why Netflix Cartoons Crush Everyone Else

Bloomberg ... and Cartoon Brew among others ... have caught on to the fact that Netflix is hammering other kid content providers:

Viewership of the three most-popular networks for the very young -- Nickelodeon, the Disney Channel and the Cartoon Network -- is down more than 20 percent this season from year earlier. ...

Netflix, whose shares have climbed 58 percent this year, is ramping up the competition further by bringing more youth-oriented production in-house. Last year, it hired Melissa Cobb away from a DreamWorks joint venture to run a kids and family division. ...

The youngest entertainment-seekers are being raised on the internet, and cord-cutting will accelerate as new batches of babies joins them. The networks have to figure out how to make more money from the shows they produce, whether they’re streamed or broadcast. ...

Netflix figured out ... oh ... a half-dozen years ago, that its job was to capture eyeballs. And that if they could capture young eyeballs, they could probably get them to stick around to watch all the other offerings on their service.

So they went to Jeff Katzenberg and DreamWorks and threw money at him: "Jeffrey? You make us a whole lot of content, which you can own but we can show, we'll help you build a new division and help keep your company afloat."

Mr. Katzenberg knew a corporate lifeline when he saw one, and agreed to the deal in about three eye-blinks. And lo! DreamWorks Animation TV was born, and the division was soon staffed, top to bottom, with animation pros who knew how to put series together, lots of series.

Jeffrey is now long gone, and there have been some division hiccups along the way, but the basic mission has been fulfilled: DreamWorks got an infusion of cash, a lot of animation was produced in relatively short order, and Nick got its desired kid content to lure young eyeballs away from Nick, Cartoon Network, and the Disney Channel.

The plan worked like a charm.

So now here we are in the middle of 2018, and the other animation producers/distributors are running to catch up with Netflix. Disney will be streaming its animated product soon, and other producers will quickly follow. Netflix, of course, has a long head start. The service had years to figure out that consumers wanted to see the shows they wanted to see when they wanted to see them, and that they wanted to be their own programmers: How to Train Your Dragon at 3 on Monday and Kung Fu Panda at 5 on Tuesday. (None of this "wait for Power Puff Girls to come on"; just point, click, go.

Netflix has been adept at training hundreds of millions to come to them for content, and NF's menu is wide and deep. Good luck to everybody else who caught wise to what Netflix was doing four years in, and who climbed on board the next train out of the station*.

* There is, of course, a reason why this happened. Other providers had old distribution systems they owned and desired to protect, so they foot-dragged on newer distribution technologies. This happened in much the same way that big-established movie producers hung on to silent movies after the upstart Warner Brothers Studio had opened its own mint producing talkies in 1927-28. Then as now, other producers scrambled to catch up.